London was chosen as the host city for the 2012 summer Olympic and Paralympic Games on 6 July 2005. Funding for the London 2012 Olympics will come from a variety of sources, with National Lottery proceeds providing £1,500million, half of which is expected to be raised by new Lottery games set up specifically for the purpose.

The OLDF was established to receive and hold the monies generated from the Lottery specifically for the 2012 Olympics and to pass them to the Olympic Lottery Distributor to fund any facilities, services or functions which the distributor considers are necessary or expedient to provide or undertake for the delivery of the 2012 Games. The balance held in the OLDF is invested by the Commissioners for the Reduction of the National Debt (CRND) and any investment proceeds added to the amount available to the Olympic Lottery Distributor.

The Fund came into legal existence on 8 April 2005 under the terms of the Horserace Betting and Olympic Lottery Act 2004 (Commencement No.2) Order 2005 (SI 2005/1134). The Fund was dormant until the announcement of the success of London as the host city for the 2012 games. The first receipt of monies into the OLDF was on 2 August 2005. The Fund will close once its primary purpose has been met and the Secretary of State makes the Order required under section 28 of the 2004 Act to wind up the Fund.